Tulsa Bankruptcy Law and Foreclosure
In a large portion of the chapter 7 bankruptcy and Oklahoma chapter 13 bankruptcy cases I do the client owns a house and doesn’t know if they should keep the house or simply walk away and discharge the debt.
The way I approach the question is to ask the bankruptcy client to consider the consequences of all the options available. In many of the cases the client is current on the house and the question to keep the house or surrender the house on its face seems to be simple. If the client keeps the house and enters in to a reaffirmation agreement he or she can use the new agreement as a means of rebuilding their credit post bankruptcy filing. Also the client can continue to live in the house and this option speaks for itself
The down side to not allowing the foreclosure and simply discharging the debt in a chapter seven is that if the house is under water, that is the home owner owes substantially more on the home than its current market value, than you are stuck with it. This may not be a bad option so long as the market rebounds and does so at a time convenient to the owner. If on the other hand the market doesn’t rebound or things happen that the client needs to get out of the house in a hurry than you’re stuck.
Another consideration the client must make is can you afford the house payment. Sometimes my clients ability to make the payment is on the razors edge. If this is the case, look out and really take a hard look at the issue. In the new normal that is the financial situation in America what will go wrong just might and if so you are on the hook for the house.
By Tulsa lawyer Charles Kania
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